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Financial Question


oldcro
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Hypothetical situation.

Man wanting to buy a new car agrees part exchange price with garage, subject to his car being as described. He did not visit the garage prior to the day of the sale.

New car is £20,000

Part exchange offer is £10,000

Leaving £10,000 to be paid.

On the day he collects his new car, without the garage checking his PX car he is given an invioce to sign.

The invoice differs from the agreed conditions as follows.

New car is £20,000

New car discount £1,000

Part exchange offer is £9,000

Leaving £10,000 to pay.

Now the man paid the original agree price so he didn't gain or loose anything.

What I would like to know is why the garage did this. On paper they seem to have received £1,000 less than they did. Was this a scam to avoid tax and VAT on the £1,000 or is there a simple explaination for their actions?

Of course such actions would never take place at a Lexus dealership. :whistling:

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at a guess i would think its to make their sales figures look better as they can now sell p/x for 10k and look like they have made 1k on it .helps them meet sales targets etc . at the end of the day all car fronts want to make a profit and please head office etc and on paper your car stands them in 9k so when it comes to resale they only have to make over this and not the 10k first offerd to you .i know they are not realy making anymore but on paper it looks better.other than that i aint got a clue :lol:

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Who give a monkey's ??

I've always shocked car salesmen when I've gone for a new car and they've gone into their 'sharp intake of breath mode' and come back with all sorts of cr*p about how my trade in vehicle isn't the right colour etc, etc, blah, blah blah.... I've then said to them "Don't care... tell you what... give me £1 for my trade in"

This usually meets with a confused look and a raised eyebrow. I then explain I couldn't care less about the book price and all I'm interested in is the botom line....... We then start to talk...

Has always worked for me in the past but make sure your do you homework first on prices !!! :winky: :winky:

The Ed

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By reducing the price of the new car they pay less VAT ( although they still have to pay the set car sales tax even if they sell it for a fiver ), so garage is better off by £175 ( I think ). This is why they quote you a price to change or at least want to so they can juggle the figures in their favour.

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By reducing the price of the new car they pay less VAT ( although they still have to pay the set car sales tax even if they sell it for a fiver ), so garage is better off by £175 ( I think ). This is why they quote you a price to change or at least want to so they can juggle the figures in their favour.

Garage don't pay the VAT as such, they collect it from the end user (buyer) and hand it on to HMRC. That is assuming that the sale price included VAT the input tax would be on what the customer actually paid for the car.

If the customers "trade in" was VAT qualifying you would want to keep the value (what the dealer paid for the car) as high as possible to get as much output tax as possible.

So just can't see any scam, and as pointed out the gain, if any, is only £175 VAT on £1k so wht bother?

Stand to be corrected though.

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Thanks everyone for your help. As for the invoice situation, it just puzzled me why they juggled the figures. I gained nothing from it, but if they did not gain anything why alter the invoice figures in the first place. What really annoyed me was if it was a tax avoidance scheme I had signed the invoice and could be accused of assisting them in defrauding the Inland Revenue.

I was not making any comment on whether Mercedes or Lexus was a better car, or who's dealers were the best. I believe there are good and bad cars and dealers in each company. I was however comparing their respective web sites, and in my opinion Mercedes Cars had much more information and a very good interactive handbook section for each model.

PS

The bottom line is that I do not trust that particular dealership anymore.

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By reducing the price of the new car they pay less VAT ( although they still have to pay the set car sales tax even if they sell it for a fiver ), so garage is better off by £175 ( I think ). This is why they quote you a price to change or at least want to so they can juggle the figures in their favour.

Yep I'd agree with this, they've definitely done it to avoid a bit of VAT - might seem like a small amount, but add it up over a number of deals and it might save them a fair amount.

I'd be very surprised if it was a main dealer that did this, because it is very dodgy indeed...... :o

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Main dealers do this of all brands. I try and turn it round and get them to quote me price to but and price to sell, then when I am happy with those I get them to reduce price on mine and give a corresponding discount off base price for new car so VAT saving comes to me ;)

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Main dealers do this of all brands. I try and turn it round and get them to quote me price to but and price to sell, then when I am happy with those I get them to reduce price on mine and give a corresponding discount off base price for new car so VAT saving comes to me ;)

Steve, what you discribe sounds like what happened to me with one exception. I did no save anything so presumably they did, which made me suspicious that there was some sort of tax scam going on in which I was implicated by signing the invoice as being correct.

I hope I am wrong, as such activities are not those one expects from a reputable dealer of executive cars of which this forum members are familiar with.

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